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Springfield City Council has given the green light to a short-term lending code that requires payday loan companies to obtain a permit from the city.
SBJ file photo
Springfield City Council has given the green light to a short-term lending code that requires payday loan companies to obtain a permit from the city.

Council passes short-term loan regulations

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Springfield City Council last night unanimously approved a short-term loan ordinance aimed at regulating payday loan companies in the area.

The code requires short-term loan establishments to apply for and obtain an annual permit from the city within the next 60 days. Subject to voter approval in August, the city also would collect an annual permit fee of $5,000, or $2,500 if there is less than six months remaining in the calendar year when the permit is issued, according to bill documents. The city cannot start collecting the fee until 60 days after voter approval.

Effective immediately, payday loan business owners also must post information on-site for consumers to review, such as interest rates and fees, and provide borrowers with payoff disclosures.

Those found noncompliant with the new code could face penalties or fines, jail time or both, according to the bill documents.

Council has considered short-term loan regulations for several years, and council members recognized in last night’s videoconference meeting that additional reform will need to be made by state legislators.

“It’s been a long road for us to get to tonight’s vote,” said Councilman Andrew Lear. “We know that any true reform will require action at the state level, but I believe this bill sends that message, and I’m confident that come August, the citizens of Springfield will send that same message when they go to the polls, or hopefully mail in or drop off their ballots.”

Mayor Ken McClure agreed that “the only real solution” is interest rate legislation at the state level.

Missouri’s 1,950% maximum annual percentage rate is the highest nationwide for a 14-day $100 loan, according to the nonprofit Consumer Federation of America. The next closest max interest rate is 780%, in Louisiana and Wyoming.

Councilman Mike Schilling expressed concern for borrowers during the coronavirus pandemic.

“It’s sort of an ironic time when we’re in a kind of an economic downturn that could be even more harmful to people in this situation who need these emergency loans with high interest rates. I hope that spurs people at the ballot box to think about moving forward with this,” said Schilling.

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